Pass the Bill to End Tip Theft in Rhode Island

Please sign our petition to urge our lawmakers to pass HB5121 and SB574 to end tip theft in Rhode Island.

"Tip theft" occurs when owners, managers, and supervisors steal all or a portion of service workers' hard earned tip money. It's a rampant problem throughout the service industry that robs low-wage workers of money they've already earned. There is no federal law against the practice.

Sometimes managers steal tips by directly demanding a cut from workers, but often they steal through deceptive service charges, credit card fees, or by including themselves in tip pools. The proposed bill would ban all forms of tip theft.

Here are the facts:

•According to the 2011 Economic Policy Institute report “Waiting for Change,” tipped workers are more than twice as likely to be below the federal poverty line as the rest of the workforce. Waiters in particular are almost three times as likely to be below the poverty line.

•Rhode Island's tipped workers often make as little as $2.89/hr in wages. The rest is supposed to be made up for with tips, but too often workers aren't able to pocket all of their hard-earned tip money.

•Tip theft is a common practice in hotels, restaurants, banquet halls, casinos, and the rest of the service industry. Recent high profile court cases filed against Mario Batali's restaurants, Hooters, and Yankee Stadium are not isolated incidents, but rather symptomatic of an injustice happening everyday in countless businesses.

•There is no federal law against tip theft. In theory the Department of Labor says all tips belong to employees, but in practice they only enforce the law if the tip stealing is putting the worker below minimum wage. So, if your boss let's you keep enough to make $7.25/hr, there's nothing you can do about it.

•Because it's such a widespread problem that lacks federal regulation, many states and cities have stepped up to prohibit tip theft. New York, Massachusetts, California, and Utah are just a few of the states that have stepped up to pass legislation. Cities such as Long Beach and Philadelphia have also passed their own laws. Workers' rights groups in San Antonio are currently pushing to pass an an act to cover their city.

•Rhode Island's proposed legislation, HB5121 and SB574, is being widely supported by the state's labor and activist community. UNITE HERE 217, RI Jobs with Justice, Ocean State Action, Fuerza Laboral, Olneyville Neighborhood Association, AFSC, Mark Gursky, and many more have signed on in support.

•Rhode Island's law would target the four main types of tip theft:

1.It bans managers, owners, or supervisors from simply demanding a cut of workers' tips, whether it be a percentage, a flat rate, or for an invented “fee” for “insurance costs” or other imaginary charges

2.It stops businesses from charging customers deceptive “service charges” or “administrative fees” that are partially or wholly absorbed by the business or by managerial employees. Customers believe such fees to be gratuities going to employees, and so don't tip workers on top of them. Businesses would still be allowed to charge customers these fees but they would need to clearly label the charges as not being a tip.

3.It prohibits employers from charging workers fees when customers tip on credit cards. Credit card companies charge businesses a card processing fee, and businesses often pass that fee onto workers when the customer tips on a credit card. The bill would require that workers receive the full tip that customers write on the credit card tip line.

4.It ban managers, owners, and supervisors from including themselves in tip pools. It prohibits back-of-the-house workers—such as dishwashers and cooks--from being included in tip pools. This is to prevent managers from paying non-tipped workers lower wages then using servers' tip money to compensate. Tip pooling would still be allowed, whether imposed by managers or created voluntarily by workers, so long as only customarily tipped employees are included in the pool.

•Some industry lobbyists want to water down the bill or create loopholes for certain kinds of businesses. We believe stealing workers tips is wrong no matter how or where it happens. We want the bill passed as it's written.

•Please call your lawmakers and sign our petition to help us end tip theft in Rhode Island.

We the undersigned individuals and organizations want to express our support for the passage of the proposed bill to end tip theft in Rhode Island, SB574 and HB5121. We see this as a common sense bill that will protect our state's workers and customers from an egregious practice that should have been banned long ago.

Tipped workers and their families already struggle to get by. According to the 2011 Economic Policy Institute report “Waiting for Change,” tipped employees are more than twice as likely to be below the federal poverty line as the rest of the workforce. Waiters in particular are almost three times as likely to be below the poverty line. We find it outrageous that it's legal in our state for employers to further exacerbate these workers' economic situation by stealing their hard-earned tip money.

Rhode Island's tipped service workers typically make a sub-minimum wage, often as low as $2.89/hr. The state permits this sub-minimum wage because workers supposedly make up for it with tip money. Too often, though, owners, managers, and supervisors are dipping into tipped-workers' gratuities. Sometimes they simply demand a cut of tips, but they also steal through deceptive automative service charges, credit card fees, and by including themselves in tip pools. The end result is that already struggling workers move closer to or sink further below the poverty line.

Tip theft is also a form of consumer fraud. As the bill's house sponsor, Representative Chris Blazejewski, points out, “When customers leave good tips for good service, they intend to reward the people who provided that service. The money should go to the servers, not their employer, especially where many workers earn less than minimum wage. Besides being unfair to service workers, it's also dishonest to consumers, who assume that tip is going to their waiter or waitress.”

There is no real federal law to protect workers against tip theft. In theory the federal Department of Labor says tips belong solely to employees, but in practice they only enforce tipping law when tip theft puts workers below federal minimum wage. So, as long as workers keep enough tips to make $7.25/hr, there is nothing the federal government will do about it.

That's why many states and cities have stepped up to pass their own laws against tip-theft. Our state's proposed law is based on one already on the books in Massachusetts, and states such as New York, California, and Utah have passed similar laws. Cities such as Long Beach and Philadelphia have also passed municipal level bills. Rhode Island is currently the only state in New England with zero tipping regulations.

Many Rhode Island restaurants, hotels, and other service establishments are already doing the right thing with tips. The bill will have no effect on them. It only pertains to the minority of businesses that are immorally dipping into their employees' earnings.

The proposed legislation targets four types of tip stealing:

•It bans managers, owners, or supervisors from simply demanding a cut of workers' tips, whether it be a percentage, a flat rate, or for an invented “fee” for “insurance costs” or other imaginary charges

•It stops businesses from charging customers deceptive “service charges” or “administrative fees” that are partially or wholly absorbed by the business or by managerial employees. Customers believe such fees to be gratuities going to employees, and so don't tip workers on top of them. Businesses would still be allowed to charge customers these fees but they would need to clearly label the charges as not being a tip.

•It prohibits employers from charging workers fees when customers tip on credit cards. Credit card companies charge businesses a card processing fee, and businesses often pass that fee onto workers when the customer tips on a credit card. The bill would require that workers receive the full tip that customers write on the credit card tip line.

•It ban managers, owners, and supervisors from including themselves in tip pools. It prohibits back-of-the-house workers—such as dishwashers and cooks--from being included in tip pools. This is to prevent managers from paying non-tipped workers lower wages then using servers' tip money to compensate. Tip pooling would still be allowed, whether imposed by managers or created voluntarily by workers, so long as only customarily tipped employees are included in the pool.

All four forms of tip theft should end, and we see no reason to alter the bill's language or provide exemptions for certain types of businesses. Stealing workers tips is wrong no matter how or where it happens.

We ask you to please bring this bill as written to a vote as soon as possible.